Laws of Attraction
Logistically, Richmond, Virginia, offered numerous advantages over Stamford, Connecticut, says Tucker McNeil, communications director of WestRock, the company formed from the recent MeadWestvaco (MWV)/Rock-Tenn merger. The nearby Port of Norfolk would allow MWV to easily export its U.S.-manufactured packaging goods; plus, access to talent was considerable, given Virginia’s expansive university system. But what really gave Virginia an edge, McNeil says, is the state’s friendliness to business—a fact highlighted by Virginia’s numerous tax breaks and favorable regulatory policies.
Moving a company’s headquarters is no small task, but McNeil says it was well worth it for MWV since Stamford is a notoriously expensive city. So nine years ago MVW did just that—and the global packaging company continues to operate in Virginia under the WestRock umbrella. (The company’s Rock-Tenn arm still has a presence in Georgia.)
Virginia Economic Development Partnership’s (VEDP) Suzanne Clark says MWV’s decision to relocate wasn’t surprising, considering Virginia’s slew of business incentives. “Our state views incentives as an investment in its economic future and as a basis for a rational business decision for both the Commonwealth and the companies,” Clark says. Particularly beneficial to business are the state’s “extremely competitive” sales and use tax exemptions, she says, as well as VEDP’s Virginia Jobs Investment Program. The latter initiative offers customized recruiting and training assistance to companies creating new jobs or experiencing technological changes, Clark explains—adding that VEDP helps companies seeking a prime business location foster international trade growth.
Other popular incentives include the Commonwealth’s Opportunity Fund, which has helped companies secure Virginia business locations for nearly two decades, and the Virginia Investment Partnership (VIP) Grant, a discretionary performance incentive that encourages Virginia companies to continue making capital investments; such a program, Clark says, results in increased capacity, productivity and modernization. All things considered, she says, “Virginia’s robust incentives help attract new business and support and encourage the growth of companies in the Commonwealth.”
In addition to Virginia, here are five other states that use incentives to attract new business:
There’s a reason 20 Fortune 500 companies call Georgia home, says Tom Croteau, deputy commissioner of Global Commerce for the Georgia Department of Economic Development. In addition to housing several prestigious universities, the state facilitates a well-trained workforce through its top-ranked Georgia Quick Start program, which provides industry-specific job training. “We hear time and again from companies that the reason they chose Georgia was due to the skilled workers found here,” Croteau notes. Such competencies have especially benefitted Georgia’s manufacturing sector, which has witnessed exponential growth lately. The state’s sales and use tax exemption on energy used in manufacturing is a key incentive for companies, Croteau says, “distinguishing Georgia from the competition.”
The Great Lakes State doesn’t just offer incentives, asserts Michigan Economic Development Corp. (MEDC) CEO Steve Arwood; Michigan has reinvented the incentive process, he says. Instead of offering tax credits that provide future savings based on jobs and investment targets, the MEDC has programs that deliver immediate cash benefit, Arwood reveals. Couple these initiatives with Michigan’s low, 6 percent corporate income tax and the state’s elimination of the personal property tax—and Arwood argues it’s easy to see that “Michigan offers one of the best pro-business environments in the country.” Each year, the state doles out $170 million in incentives and assistance; plus, $100 million is available in loans to small and midsize businesses in Michigan.
The Minnesota Job Creation Fund may be the proverbial new kid on the block, but it’s already proven to be a game-changer, says Kevin McKinnon, deputy commissioner of the Minnesota Department of Employment and Economic Development. Since its January 2014 launch, the Job Creation Fund—a pay-for-performance initiative helping companies expand in Minnesota—has awarded $19.3 million to 37 Minnesota companies. Another key incentive is the Minnesota Job Skills Partnership (MJSP), which funds training programs for individual businesses. Under this initiative, the MJSP pays up to $400,000 for educational institutions to develop and implement training curriculum for local companies—a model that McKinnon calls “highly effective.”
Since 2008, businesses in Louisiana have benefitted from Louisiana Economic Development’s FastStart workforce development initiative—a program creating customized employee recruiting, screening and training techniques at no cost to eligible companies. Governor Bobby Jindal calls FastStart instrumental in improving Louisiana’s business climate, adding that the nationally renowned program has helped the state become “a top-tier destination for domestic and foreign economic development projects.” Louisiana further incentivizes companies via the Angel Investor Tax Credit—which offers up to a 25.2 percent tax credit for individuals who invest in new, wealth-creating businesses—and the state’s Industrial Tax Exemption, a program providing full property tax abatement for up to 10 years on a manufacturer’s new investment and annual capitalized additions.
Among Utah’s various business incentives, two stand out from the pack, according to the Governor’s Office of Economic Development’s Michael Sullivan. The state’s Economic Development Tax Increment Finance (EDTIF) and companion Industrial Assistance Fund (IAF) are “generally most exciting to companies growing in Utah,” Sullivan says, with the former incentive granting businesses expanding in or relocating to Utah a post-performance, refundable tax credit of up to 30 percent over five to 10 years. The IAF similarly has specific capital investment requirements and disburses appropriated post-performance cash for endeavors such as job training and management relocation to Utah. Also advantageous to businesses, Sullivan says, is Utah’s flat, 5 percent personal and business tax, which the state has levied since 2007.